It has been reported two Lehman Brothers entities have won a temporary reprieve in their battle with three Australian local government authorities following a decision by the High Court in Sydney to test a verdict that would have allowed the local authorities to sue in the US.

The City of Swan, in Perth, and the Parkes and Wingecarribie councils in New South Wales State have lost millions of Australian dollars through investments in structured debt products sold by Lehman before its collapse last year.

In May this year, a deed was agreed with related Lehman entities such as Lehman Brothers Asia Holdings, whereby contingent creditors were expected to receive between 2.4 and 10 Australian cents on the dollar for their investments and would have also been obliged to release all third parties, including members of the Lehman group, from any possible legal action.

Following this the three councils took the ruling to Australia's Federal Court where the deed was declared void and outside the scope of Australia's Corporations Act, and orders were made for the winding up of Lehman Australia.

It is now expected that a full appeal hearing will be held in February 2010 to determine the matter.